Vietnam’s TPP invites top textile investors

Vietnam garment and textile sector has been drawing in investment projects from China, Taiwan, and Hong Kong of which China’s investment in Vietnam have been increasing piercingly Vietnam in anticipation of the signing of the Trans-Pacific Partnership (TPP) in additional will have access to lucrative market that would come with it.

Foreign businesses are also aware that with Vietnam joining the TPP, specifically the TPP rule of origin (yarn forward) which requires businesses to use raw materials, supplies and components in the manufacturing process that originate in the same country the manufacturing facilities are located in.

Or, in the alternative, import the items from another TPP member nation. This rule provides Vietnam an irreplaceable competitive edge in the garment sector, and is one of the prime reasons Chinese businesses find the Vietnamese garment sector highly attractive for investment.

In 2012, investment projects by China were US$ 345 million moving up to US$2.3 billion in 2013. The investment waves were made into the garment and textile sector and real estate as per the Ministry of Planning and Investment’s Foreign Investment Agency.

Recently, Jiangsu Julun Textiles Group co Ltd received investment license approval from Nam Dinh Provincial People’s Committee to construct a US$68 million manufacturing facility on an 80,000 sq. m area of the Bao Minh Industrial Park.

The facility will specialize in yarn production, having total annual production capacity of 9.816 tpa once fully operational, just right for the production of textiles, sewing, crocheting, knitting and weaving.

In another promising development is HongKong’s Luenthai company, the Vietnam National Textile and Garment Group (Vinatex) and China’s Sanshui Jialida Textile Company held a discussion with the leaders of Nam Dinh province, on constructing a multi-million garment manufacturing facility in the industrial park (IP).

The IP project to cover an area of nearly 1,500 hectares in Nghia Hung district, Nam Dinh province with a total projected initial investment of US$400 million and with a target market of developing weaving, dyeing, leather, garments and textiles as well as support industries for Vietnam’s garment and textile sector. While the final approval is at hand , the project is expected to begin construction in late 2014.

Another, Chinese Texhong Textile Group has invested in two yarn facilities with capacity of 500,000 spins of yarn in the southern province of Dong Nai generated 4,500 jobs in the locality.

The group has further going ahead with an additional investment of a US$300 million facility in Quang Ninh province with a capacity of 500,000 spins of yarns in the first phase, bringing the group’s total spins of yarns capacity to one million which is equivalent to Vinatex’s yarn factories.

Vietnam has failed to achieve the target of producing even one billion metres of the fabric over the years and currently imports over 6 billion metres of the fabric to serve the garment and textile sector each year,

The new economic developments in the global marketplace, and in light of the signing of the TPP, Vietnam should welcome the investment inflow, especially from China, Taiwan and Hongkong.

But this inflow might reduce the benefits for original Taiwan based manufacturers as the cost production of raw materials, components and supplies in the garment sector, generating jobs and taxes burdening the government which would prove the treaty futile. It is thus imperative for the State to improve its management capacity by regulating agencies and make foreign investors totally aware of Vietnamese laws.

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